As you may have heard, there were two significant bank failures this weekend, Silicon Valley Bank headquartered in California and Signature Bank headquartered in New York. Silicon Valley Bank was the fifteenth largest bank in the US and will be the second largest bank failure in U.S. history . Signature Bank was significant as well with assets in excess of $100 billion.
In similar situations, the FDIC has sought a larger bank to purchase the failing bank rather than taking control of it themselves. A number of banks were approached about this possibility but all declined and SVB and Signature Bank will be directly managed by FDIC through specially formed bridge banks. Depositors will have access to funds under the $250,000 limit today (3/13/2023) and as much as 50% of uninsured deposits could be made available this week. It is estimated that over 90% of SVB deposits were more than the $250,000 limit. The situation is similar at Signature Bank.
Secretary of the Treasury, Janet Yellen, has stated that there will be no federal bailout for these institutions and any consumer losses will be absorbed by the FDIC insurance fund.
While companies with large deposits with these banks could be impacted and there may be fallout across the banking industry, these failures will have no significant impact on the Credit Union. Any credit union involvement with these banks would be limited to 100% federally insured certificates of deposit.
It is important for consumers to realize that credit unions are the best choice for consumers when it comes to their banking needs. Because of our structure as consumer owned cooperatives, credit unions are less likely to engage in and in some cases forbidden from engaging in the type of activity that led to these failures.
If you have more questions about this, there are many news articles available, however remember to only read articles from trusted news sources. Do not rely on information available on Facebook, Twitter, or similar social media outlet. These are not news sources.
